Credit rating rationale. The bond below is a senior unsecured debt of JSC Avangard-Agro (the Company). Due to the absence of either structural or contractual subordination of the bonds, ACRA ranks the bonds pari passu with other existing and future unsecured and unsubordinated debt obligations of the Company. According to the ACRA methodology, the reimbursement rate for unsecured debt relates to category II; hence, the bond issue is assigned the credit rating BBB-(RU), on par with the credit rating assigned to the Company.
The credit rating of the Company stems from its adequate business profile, very high profitability, strong cash flow, medium debt load and high coverage of interest payments. On the other hand, the rating is affected by the Company’s medium size, limited ability to influence product prices, concentration of shareholder risks on the sole beneficial owner, tight financial connections with “AVANGARD” JSB (BB+(RU), Stable) and high share of short-term debt causing liquidity risks.
Key issue properties
| Borrower | JSC Avangard-Agro |
| Issuer credit rating | BBB-(RU), outlook Stable |
| Actual issuer | JSC Avangard-Agro |
| Type of security | Exchange-traded interest-bearing certified unregistered bond, |
| Issue volume | RUB 3 bln |
| ISIN / RegS | RU000A0ZYH02 |
| Final placement date | November 28, 2017 |
| Maturity date | November 16, 2027 |
Regulatory disclosure
The credit rating has been assigned under the national scale for the Russian Federation and is based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments under the National Scale of the Russian Federation, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating has been assigned to BO-001R-02 series bond issued by JSC Avangard-Agro for the first time. The credit rating is expected to be revised within one year following the rating action date (November 27, 2017).
The credit rating is based on the data provided by JSC Avangard-Agro, information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and JSC Avangard-Agro participated in its assignment.
No material discrepancies between the data provided and the data officially disclosed by JSC Avangard-Agro in its financial statements have been discovered.
ACRA provided no additional services to JSC Avangard-Agro. No conflicts of interest were discovered in the course of credit rating assignment.
